You Won't 'Like' This: How Facebook Is Draining Your Wallet
The average Facebook user spends more than eight hours a month on the social networking site, and many of us spend much, much more. So it's easy to figure that cutting back on Facebook could lead to a more productive life. But you might not expect it could also lead to more money in your wallet.
A new survey from Sociable Labs found that 75% of over 1,000 consumers clicked on product links shared or "liked" by friends on Facebook. More than half of those would then go on to make impulse buys, swayed by the deals and incentives. Experts are calling this process, in which consumers vet products via their social media connections, "social proofing."
A positive reaction to a product or a deal from a social media friend gives it legitimacy. Add a dash of peer pressure, a sense of immediacy, and the Internet's ease of transaction, and it's obvious why these purchases are happening more commonly. Facebook is affecting your spending habits more than you may even realize.
"Retailers have the ability to trigger this kind of sharing from their e-commerce sites, driving both significant referral visits and conversion uplift if they fully leverage it," said Darby Williams, vice president of marketing at Sociable Labs. "Now with high-velocity 'frictionless sharing', social sharing can become one of the top drivers of both for almost any online retailer."
The True Value of Facebook Likes -- 'Likeonomics'
It's hard to put a fixed value on what a "like" is worth, but advertisers clearly think it's pretty high.
After all, American consumers spend some 15% of their online time on Facebook, where they are a somewhat captive audience to its recommendations and status updates (which reach, on average, 12% of a person's Facebook friends, according to comScore), as well as other information broadcast on the NewsFeed.
Ford last year, for instance, tried to capitalize on the influence of Facebook by running a viral campaign for its Ford Focus headlined by "Doug," an orange spokespuppet, as The Wall Street Journal reported. Once Doug garnered 10,000 fans, Ford stopped actively promoting him via Facebook ads and allowed the narrative and promotion to work organically.
The campaign worked: Of those who "liked" Doug and became his fans on Facebook, 61% said they'd be more inclined to buy a Focus.
Rohit Bhargava, a senior vice president with WPP agency Ogilvy, coined the term "likeonomics" to describe the way social media approval within your network can influence your purchasing habits. There is something of a community connection, a buyers' club of sorts, that emerges from the web of social media.
According to comScore's Whitepaper The Power Of Like, the value of a "fan" comes in the form of increased loyalty and engagement, augmented purchasing behavior and the ability to influence others within the network.
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A Facebook analysis of the top 100 brand pages indicates that every fan offers a brand exposure to an additional 34 Facebook friends of that fan. That multiplier effect has enormous potential.
For instance, Starbucks has 5,500 cafes in over 50 countries, and in May 2011, Starbucks' social media brand impressions reached more than 53 million people worldwide. One way to quantify the value of winning someone as a fan -- and thus the ROI for social media investment -- is the likelihood of that person to visit the brand's website. Starbucks fans were 418% more likely to visit Starbucks.com than the average person, and friends of fans were 230% more to visit the site.
To make the value even more clear, Starbucks and comScore analyzed in-store purchase patterns. Starbucks fans and friends of fans spent 8% more and made purchases 11% more frequently than the average Internet user who visited Starbucks.
Saver, Beware
As a counterpoint to the influence to buy that all those "likes" and "shares" exert, there's our long economic downturn, which has ushered in a trend of "thriftiness consuming," according to Lauren Weber, author of In Cheap We Trust. Yet that ostensible trend toward frugality may actually make more rampant spenders out of many consumers: The allure of deal sites, discounts and social media promotions can end up taking a bite out of your bank account.
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"I'm a member of some of these services, but ultimately they tend to encourage more spending than saving," Weber said. "It's tough to resist a bargain, but you end up buying lots more massages and yoga classes and three-course meals than you would have without the coupons. It requires a lot of self-control to resist. "
Beyond that, all this social media-influenced purchasing leaves consumers vulnerable to privacy breaches. Of the 11 million odd people who suffered identity theft in 2011, people involved in social networks reported the most fraud, according to Javelin Research.
Though the deals you see while taking care of your Farmville livestock may seem promising, people looking to balance their budgets might do well to unplug more or go cold turkey and deactivate their Facebook accounts -- for the good of their trigger-happy purchasing fingers, as well as their personal finances.
